OvalX (previously known as ETX Capital) might be in the process of shutting down its operations and starting layoffs, an industry insider close to the company revealed to Finance Magnates. It came after the takeover of the FX and CFDs broker by the Swiss private equity firm, Guru Capital.

According to the source, the company has already started to lay off its staff. However, it is unknown when the company will finally shutter its operations, and so far, the OvalX response has been to state 'business as usual'.

OvalX's Response

In an official response to Finance Magnates, OvalX said it is undergoing a strategic review to optimize its business and adapt to the current economic climate. It did not mention anything about the shuttering of its operations. Instead, the company confirmed an ongoing cost-cutting and efficiency program is in place.

It is now reviewing its cost base and actively consulting with various stakeholders to drive down costs and explore strategic solutions. It includes a possible merger or asset sale discussion with at least one other broker. Additionally, it revealed an ongoing "consultation process with some employees" but did not specify anything about the layoffs.

"It's business as usual at OvalX. We're a well-capitalized business," Luca Merolla, the CEO of Oval Money, said in a statement. Merolla, previously at Guru, took over the responsibilities last September and replaced Philip Adler.

"The global economy has suffered, and the wider industry experienced a significant reduction in trading volumes in 2022, and we were no exception. As a result, we continue to explore various strategic options. I want to assure our clients that the OvalX trading support services and customer experience is operating on a business-as-usual basis, and we will maintain the standards that our customers have become used to."

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Poor Business Performance

OvalX, previously known as ETX Capital, is operated by London-headquartered Monecor Limited. Guru Capital's Managing Partner, Ryan Nettles, resigned from the Board of Monecor recently. He told Finance Magnates that he resigned as "another project at Guru Capital [came along] that requires [his] full attention."

In the latest financials for 2021, the first financial year under Guru's stewardship, Monecor reported a pre-tax loss of £9.2 million due to staggering investments and macroeconomic events. Its net loss was £6.8 million after a tax credit, falling from a net profit of £428,000 in the previous year.

The profits took a hit as trading revenue dropped to £24.1 million from £31.7 million in the previous year because of Brexit. Its spread revenues were down 45 percent year-over-year, but funding revenue increased 39 percent, which was boosted by its professional client base.